TREASURIES tumbles after Credit Suisse deal

After a week of rout in banking shares, a rescue of Credit Suisse Group AG and an offer of dollar liquidity dremped demand for haven assets, leading to a decline in the Bloomberg Treasuries.

None of Credit Suisse Said to push back against UBS'$1 Billion Offer.

The two-year yield jumped by 18 basis points to 4.02%, while the 10 year benchmark yield advanced five basis points to 3.48%. The move came after UBS Group AG agreed to buy Credit Suisse while the Federal Reserve and five other central banks announced plans to boost liquidity in dollar swap arrangements.

Jessica Ren, a fixed income strategist at Westpac Banking Corp. in Sydney, said that despite the fact that yields will continue to rise but that it's not likely that we'll settle into a new trading range after this week's FOMC. Price action will be more sensitive than usual, according to the headlines. Traders are trying to figure out how the recent volatility in global markets will affect the Fed rate decision on March 22. Policy makers have to rein in price pressures without exacerbating financial stability worries fueled by Credit Suisse's troubles and the collapse of three US lenders.

The US overnight indexed swaps see a 70% chance of a quarter-percentage point hike at this week's Fed meeting, up from the 50% odds of 50% penciled in during the middle of last week.

Markets are likely to remain nervous even after UBS agreed to buy Credit Suisse, said Andrew Ticehurst, a rates strategist at Nomura Holdings Inc. in Sydney. Markets are likely to remain on edge for some time, because we are only at the beginning of what could be a long and wild week. The US yields swung between 3.71% and 4.53% last week, the widest weekly range since September 2008. The MOVE index, which measures implied volatility in Treasuries, was the highest level since the 2008 financial crisis, reaching 199 points on Wednesday.